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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Hello team,

A couple of years ago you advised that your 'ideal sector classification' would be as followed:

Consumer Cyclical
Consumer Staples
Retail
Financials
Real Estate
Health Care (CDN)
Health Care (US)
Capital Goods / Industrials
Transportation
Information Technology
Internet / Software
Telecommunication Services
Energy
Gold / Silver
Materials
Utilities

I ask this question every 6-9 months when I am doing sector re-balancing. Given today's market conditions, what would be your ideal weighting for each of these for an investor who has a long time horizon and is a 7/8 out of 10 on the risk scale?

My current weighting breakdown is:

Consumer Cyclical - 12%
Consumer Staples - 9%
Retail - 2%
Financials - 9%
Real Estate - 1%
Health Care (CDN) - 3%
Health Care (US) - 2%
Capital Goods / Industrials - 14%
Transportation - 3%
Information Technology - 8%
Internet / Software - 15%
Telecommunication Services - 4%
Energy - 3%
Gold / Silver - 2%
Materials - 8%
Utilities - 4%

I find myself usually becoming overweight in Consumer Discretionary and Info Tech / Software as most of your top picks are in those categories. Any thoughts on where I should be scaling back / adding to?

Please deduct multiple question credits. Thank you.
Read Answer Asked by Ray on October 16, 2017
Q: Hi there, I currently have no exposure outside of the TSX and the Canadian market. I know ETFs are often recommended as good ways to get exposure outside of Canada but I was doing research into mutual funds and the new Fidelity Insights fund managed by Will Danoff seems like it is performing well. In addition, it sounds like his Fidelity Contra Fund in the US seems to perform quite well over time. What are your thoughts on him as a fund manager and the Fidelity Insights fund for outside of Canada exposure? Also, there is the standard version and a currency neutral version - which I presume implies hedged and unhedged. If this will be a longterm position, which would be preferred between the two? Thanks for your guidance!
Read Answer Asked by Michael on October 16, 2017
Q: Hello I am looking for a "one stop" etf that covers everything but US and Canada, which I am adequately invested in. I have checked the Vanguard Canada products such as VI/VIU but they seem to have a heavy concentration of investments in Japan (21-23% of holdings). Are you aware of another etf that may be appropriate? In the alternative should I consider one covering Europe and one covering emerging markets? Your thoughts would be most helpful. Thank you, Bill.
Read Answer Asked by Bill on October 16, 2017
Q: The recent issue of the ETF & Mutual Fund Update discussed two ETF’s in the U.S. Technology Sector, ZQQ and XQQ. In your opinion would BST:US be as good as or better than the above mentioned?
Thank you for considering my question.
Read Answer Asked by Gail on October 16, 2017
Q: 5i Team,

I notice that you have IWO tagged as a financial stock in the growth portfolio, however, when I check the sector break down for it (here: https://www.ishares.com/us/products/239709/ishares-russell-2000-growth-etf), financials are only stated as 6%. The 4 major sectors (Info tech, Health Care, Industrials & Consumer Discretionary) make up 80% of the ETF.

Any specific reason for that classification in the growth portfolio? Should I be tagging IWO as a financial in my portfolio? Thanks.
Read Answer Asked by Ray on October 16, 2017
Q: the Company seems cheap especially when you consider it holds approx. $600M of marketable securities (approx. 1/2 being BMO shares). When i factor this out of the market cap (value) of the company and then just look at the fund management business, this is valued at a very low value and does not seem to be given credit in the market cap. Am i missing something or is the business just not doing very well.

thanks Ken
Read Answer Asked by Ken on October 16, 2017
Q: In your model portfolios you hold 20-25 stocks. I am selling a home and expect to have about $750K to add to my existing $500K. I have always had a preference for keeping my holdings in a particular company smaller and thus having more diversity than that. In my new plan I would hold about 40 to 45 stocks. I am retired and a fairly conservative investor and focus on income but would add some growth in the new plan. Am I trying to diversify too much?
Read Answer Asked by Albert on October 16, 2017
Q: TSGI's earnings are to be announced in about a month - I believe the estimate is .47 vs .42 same time last year. Any sense of what to expect ?
I will be trimming my TSGI position at some point and was considering putting those funds into GC. Do you feel a 10% total allocation between these 2 gambling stocks (roughly 5%/5%) is too much in an otherwise diversifed portfolio ? Thanks, as always.
Read Answer Asked by Alexandra on October 16, 2017
Q: Peter,
RESP first needed in 3 years with ~equal amounts of BNS, GUD, OTEX, PHO & T;
with cash for 2 more positions. What would you add or change at this time ? Thank you.
Read Answer Asked by Paul on October 16, 2017
Q: Hi, since the end of Sept. TD.PF.B price has risen by 5% & RY.PR.H by 7%. When purchased TD.PF.B interest rate was 3.8% & RY.PR.H was 3.9%. Their 5 year interest re-calculation date is 2019. During that same period ENB.PF.E price has risen by only 2.5%. At purchase ENB.PF.E interest rate was 4.4% & it’s 5 year interest re-calculation date is 2020. The present dividend yield of ENB.PF.E is 1% greater than the two bank preferred shares. My question is, do you have insight as to why the bank preferred shares have performed much better than the Enbridge preferred shares since the end of Sept. Thanks … Cal
Read Answer Asked by cal on October 16, 2017
Q: I'm guessing 5i has a substantial number of clients now and I am wondering if that is a factor in issuing a sell recommendation on a stock when a major event happens? For example, would Peter have " done nothing " as a portfolio manager when SHOP was attacked as was instructed to 5i member's? In no way is the a question on integrity or a lack of respect, I'm a 5i member for life!
Read Answer Asked by Charles on October 16, 2017
Q: Seems to me management has not done a very good job in providing shareholders with any comfort during the short attack. The only mention from media I've witnessed has been a name calling tweet and "wait till later" for explanation, have I missed anything? Even with the decline I'm still a very happy shareholder, buying more on the way up, letting run to a 9% position and thankfully selling down to a less than full position. Much credit goes to 5i for teaching me these skills, thank you!
Read Answer Asked by Charles on October 16, 2017
Q: Boardwalk REIT constitutes about 13% of my TFSA and I am essentially breakeven on the stock having bought some at low prices in 2009 and more at a very high price in 2015. Your comments that it is a hold for dividends troubles me since although currently an excellent dividend I want either higher dividends or capital gains in the long term i.e. in 10 years or so. Do you see it continuing to tread water for 10 years or do you see a rebound in stock price or even higher dividends before then? Can you also provide a bit of an explanation for your answer. Much appreciated.
Read Answer Asked by ED on October 16, 2017
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